Robert C. Weiss posted an alert on LinkedIn advising real estate professionals about the significance of a case recently decided by the California Court of Appeal that demonstrates the importance of exercising a lease extension option on time, or risking the termination of the lease.
In that case, Coyote Aviation Corp. v City of Redlands, the lease included specific requirements that the tenant had to meet in order to exercise the option to extend. Notably, these included providing the landlord with advance notice of the intent to extend. The tenant failed to provide notice before the deadline for doing so had passed, and as a result it was forced to vacate the premises.
The lesson every tenant should take from this decision is to carefully review their leases to be certain they understand what is required for them to exercise their extension rights (and other terms of the lease) on time and in the required manner. The crucial items are set forth below:
- The time period for providing notice of the extension. Be aware of the distinction between business and calendar days.
- The form of the notice. Is it a simple e-mail (which is doubtful), or a written and signed directive.
- Scrupulously comply with the manner in which the notice is to be provided (e.g. personal delivery, overnight courier, e-mail), and send it to every person named in the lease as a recipient.